According to an article called “creating product buzz” published on the Newsweek magazine this week it’s happening in Japan. Most of the commercial firms in Japan now are recognizing the value of blogs in promoting their products. The Central Railway Company in Japan for example invited the bloggers to a press preview on Japan’s newest bullet train. As a result those bloggers wrote about the train and it was a good publicity for the company.
Nissan Motor (Japan) invited about 100 popular bloggers for the launch of its new car, skyline. Also, there are so many high tech gadgets, game software and beauty products companies who have begun to reach out to bloggers in the hope that they’ll promote products.
During the last century we have witnessed how TV advertising rapidly took share away from radio, and how free-to-air TV has lost its share to pay TV.
The question is, could using the blogs as a marketing tool outpace e-mail, TV and magazine marketing on the near future and lead the companies to shift their marketing spending?
Let’s wait and see.
Saturday, December 29, 2007
Wednesday, December 26, 2007
Creativity on developing business models
In our last class we discovered a beautiful and innovative web site called Musicovery. Musicovery has created a beautiful gadget for its customers, well done. For me it’s almost perfect, I can select my music from different periods, different genres, and different mood as well. What else I need, its really brilliant web site. We have discussed at the class the business model used in Musicovery, and we came to know that their revenue comes mainly from the advertisements, commissions on downloads and the premium memberships. I guess we have agreed as well during the class that this business model is sustainable, but after the class I was wondering how could it be sustainable with many others competitors on the scene. I am sure that there are many other businesses like Musicovery which offer music worldwide, not to mention the ones that offer a free downloads of music. As you can see the competition is fierce and only few businesses could survive from my point of view.
Companies have to come up with new business models to guarantee their sustainability. I came across a web site called Musana where the publisher on the first page specified their business offer which I found it unique. They are going to offer the following:
• Store individual customer’s music, CDs in a digital locker created for each and every one (isn’t that interesting!!)
• The customers will be able to listen to their music anywhere, using internet or their cell phone
• Customers will be able to share their taste with other friends on line or on their blogs.
Let’s look into this unique business model and analyze it. The web publisher is offering the customer the chance to upload their own music and CDs.
From my point of view, this offer solves so many problems for the customers. They would be able to store all their music in one place, instead of scattering them among the CDs, laptops, iPods or MP3. In another way, the customer here will be able to create his own digital music library.
As to the web publisher, the idea of allowing customer to upload their own music has saved him the hassle of finding contents providers or retailers (as we have seen in Musicovery case) and conduct a deal with them.
I am sure that many people will be interested on this web site. Regardless of the age group that might be attracted to this site, the customers will surely have a treasure of personal play lists that they like to share it with others. Also, they could be that curious types who like to explore others taste on music. In either way, I think the idea is brilliant.
Let’s look now at the source of revenue from this business model:
• The up-load will be free and I assume the storage would be free as well, if not then it will be source of revenue for the publisher.
• As to being able to listen to the music from the customer’s mobile, I assume this could be free, what the customer need to do, is just to create a profile and log in name and password and bingo, he can log in whenever he/she wishes and listen to his own selection of music.
• Sharing music could be a source of revenue for the web publisher. Say I was on line and I got another friend on line as well, both of us have already our own music play list. We can exchange our music on line and the web publisher can charge us for that.
• The main source of revenue for sure would be the advertisements on the web site.
We have witnessed a rise of some startups companies on the digital world, where within few years they grow to become global leaders, they receive millions of views per day. Good examples here are: YouTube, MySpace and FaceBook.
What makes all these businesses successful? I believe the innovation does that. Being creative and customize the products to customers to suit their tastes is the main reason behind the success of any business.
On the other hand, consumers have changed. We have experienced recently a shift on consumer’s behaviour especially on communication. Consumers nowadays prefer to use the e-mailing, mobiles, SMSs, personal blogs, and on-line communities as a way of communication. Also, you can see them actively getting involved on the voting for reality TV shows and they like to post their own video creations on the web.
As a result of that, businesses need to react and leverage their businesses with creativity.
Companies have to come up with new business models to guarantee their sustainability. I came across a web site called Musana where the publisher on the first page specified their business offer which I found it unique. They are going to offer the following:
• Store individual customer’s music, CDs in a digital locker created for each and every one (isn’t that interesting!!)
• The customers will be able to listen to their music anywhere, using internet or their cell phone
• Customers will be able to share their taste with other friends on line or on their blogs.
Let’s look into this unique business model and analyze it. The web publisher is offering the customer the chance to upload their own music and CDs.
From my point of view, this offer solves so many problems for the customers. They would be able to store all their music in one place, instead of scattering them among the CDs, laptops, iPods or MP3. In another way, the customer here will be able to create his own digital music library.
As to the web publisher, the idea of allowing customer to upload their own music has saved him the hassle of finding contents providers or retailers (as we have seen in Musicovery case) and conduct a deal with them.
I am sure that many people will be interested on this web site. Regardless of the age group that might be attracted to this site, the customers will surely have a treasure of personal play lists that they like to share it with others. Also, they could be that curious types who like to explore others taste on music. In either way, I think the idea is brilliant.
Let’s look now at the source of revenue from this business model:
• The up-load will be free and I assume the storage would be free as well, if not then it will be source of revenue for the publisher.
• As to being able to listen to the music from the customer’s mobile, I assume this could be free, what the customer need to do, is just to create a profile and log in name and password and bingo, he can log in whenever he/she wishes and listen to his own selection of music.
• Sharing music could be a source of revenue for the web publisher. Say I was on line and I got another friend on line as well, both of us have already our own music play list. We can exchange our music on line and the web publisher can charge us for that.
• The main source of revenue for sure would be the advertisements on the web site.
We have witnessed a rise of some startups companies on the digital world, where within few years they grow to become global leaders, they receive millions of views per day. Good examples here are: YouTube, MySpace and FaceBook.
What makes all these businesses successful? I believe the innovation does that. Being creative and customize the products to customers to suit their tastes is the main reason behind the success of any business.
On the other hand, consumers have changed. We have experienced recently a shift on consumer’s behaviour especially on communication. Consumers nowadays prefer to use the e-mailing, mobiles, SMSs, personal blogs, and on-line communities as a way of communication. Also, you can see them actively getting involved on the voting for reality TV shows and they like to post their own video creations on the web.
As a result of that, businesses need to react and leverage their businesses with creativity.
Saturday, December 15, 2007
Sunday, December 9, 2007
The Long Tail
I should admit that I have not heard of the term “Long Tail” before doing this little research on it. I truly found the Long Tail phenomenon is fascinating and it opens doors to revive the sale of a long range of products or items that have not seen the light one day.
The Long Tail term describes those products with low demand or low sales volume which can collectively make up a market share that exceeds the current bestsellers, if only the store or distribution channel is large enough. For example, Netflix has centralized warehouses, therefore their storage cost is low and their distribution costs are always the same whether for popular or non-popular movies. As a result of that, they are able to create a huge stock of wide range of movies than the traditional movie rental stores and their revenue out of the non-popular movies collectively has exceeded their hits.
On the other side, what really helps the customers to have access to this vast amount of varieties even outside their geographic area is the availability of powerful search engines, recommender software and sampling tools.
I believe that the Long Tail phenomenon has a positive impact on the marketing environment. For example, the consumers have benefit widely from following the good recommendations which gives them the chance to explore new items that are more appealing to their taste. The retailers for sure benefit by increasing their sales revenue through pushing back to the market some products that one day have achieved moderate revenue or maybe none. Also the Long Tail has an impact on the culture as it could lead to improvement in society’s sense of culture in different ways through for instant reviving some old songs or movies or even TV series. In addition to that, we should not neglect the impact of the Long Tail on the entertainment industry as a whole because it allowed smaller movies, music and other products to reach out whether to customers or producers. We can say that the phenomenon of the Long Tail has flourished creativity across so many fields and youTube could be a good example here.
I guess in the future there will be a shift on the digital entertainment industry from the mass market to smaller niche markets that are more personalized and are appealing to different groups tastes. The reason why I am saying that is because there are lots of people who do follow the recommendations given to them whether we are talking about books, music, DVDs or other items. They are discovering their taste, trying to explore new things instead of just accepting what is pushed to them over the mass market.
The Long Tail phenomenon has surely affected most of the internet based businesses to an extent where most of them have leveraged the Long Tail as part of their businesses. The following are good examples:
• eBay (auctions)
• Yahoo, Google (Web search)
• Amazon (retail)
• iTunes store (music and broadcast)
• Netflix (video rental)
The question is whether the Long Tail could work on the traditional businesses (off- line) or not? Personally I think it does work maybe with a less degree than the internet based businesses but it can work. For example if we considered FNAC or Virgin Mega stores here in Paris at least, from time to time we notice that they are offering some DVDs or CDs with lower prices. Those items could be an old published items or items that have achieved modest revenue below the re-tailors expectations and sometimes it could have been a hit one day. Another thing I found it very interesting is that at FNAC this year before releasing Matt Damon movie “The Bourne ultimate” which I guess many people were looking forward to watch, they offered a package of the previous series “The Bourne supremacy” and “The Bourne identity” produced at the years 2004, 2002 respectively. Now in any of these situations the re-tailors managed to push back products, from their Long Tail, to the market and I am pretty sure there is incremental revenue gained out of this practice otherwise they wouldn’t have done so. In another words, the re-tailors are pushing back products to the consumers down the tail with lower prices.
Chris Anderson (Author of The Long Tail: why the future of business is selling less of more) said “such “misses” – referring to the non-popular products- cost less to make available than hits, so why not even less for them?”
Another example is the TV stations. I am going to talk about a TV stations in my home country Dubai. As we know most of the TV stations are competing to come up with new programs and movies to attract the largest percentage of viewers, now this is a norm. In Dubai we have a channel called “Sama Dubai” targeting purely UAE nationals and some nearby Gulf States because anyway we have a common culture. I have noticed that this channel is re-broadcasting from time to time some very old popular TV series, plays, songs and even cartoons. Things I have not seen since my childhood especially the cartoons. I know that I am old enough now and I ought to watch some serious stuff whether on CNN or maybe financial news but you can’t imagine how much thrilled I was to see those old cartoons. In fact I wasn’t the only one who loved it; everyone liked the whole programs offered by Sama Dubai regardless of the ages. Now what did this channel do? They have revived some old products –the programs- and reoffered it to the customers –the viewers- and to their surprised the whole thing was a success as they realized that they are many followers to these programs. Of course the TV’s revenue come out of the commercial slots during the shows which could exceeds collectively in this case the revenue generated from other programs not existing on the Long Tail.
Another example of TV station is Rotana. Rotana is a Saudi TV station offering around five specialized channels. I am going to specify here two main channels as on a later stage I am going to talk about the digital music on this company. Rotana has a channel called “Rotana tarab” (which is specialized on broadcasting old Arabic songs) and “Rotana zaman”(which is specialized on broadcasting old Arabic movies). With the high competition towards producing hits songs and video clips as well as the huge financial budgets (of course insignificant if we compare it to the US movies industry!) allocated for new movies, those two channels have survived and made it through. There are lots of followers to these channels as well as their revenue (out of commercial slots and SMS) collectively could exceeds sometimes the revenue generated from some new shows suppose to be considered as a hit.
Last but not least example that I can come up with to demonstrate that the Long Tail phenomenon could exist offline as well is on the Telecom services. Now I know that I have chosen a very sensitive sector that the changes and improvements within it are a must, but let’s say the example that I am going to demonstrate is a very special case and could not be applied always to this sector because with the new technology and invention some products or services could ended up as obsolete and are replaced by more modern practical technology.
Companies like Mobily in Saudi Arabia and Etisalat in UAE are usually bundling services like voice mail and call transfer facilities and re-offer it with their GSM cards and pre-paid cards. Now these services were a hit one day but with the emergence of new services like SMS, MMS, roaming, and missed calls notification services, customers have shifted away from voice mail and call transfer facilities to these new services. So with the bundling strategy used, the telecom companies were able to gain incremental revenues from their Long Tail products like the voice mail and the call transfer.
Case Study
Rotana started off as a record company in 1987, and grew to become the leading producer / distributor of Arabic music and film in the world, with the highest revenue generating mobile content corporation in the entire Middle East, North Africa, the Gulf and Europe. (www.rotana.net)
Rotana has offered recently a limited edition iPods (5000 iPods only) that contains all the songs, video clips, parties, and interviews of one of their artist. The iPods produced are with a serial numbers engraved on the back of the iPod as well as the photo of the artist on the front. What makes this iPod unique is the content. They have included some very old songs as well as songs that have never been heard or watched to the artist’s fans along of course the other known songs. Also the limited edition offer and the serial numbers given have personalized the product and made it special to the customers. In addition to that they offer the buyers a free upload to all the up-coming songs of the same artist. The iPod was a huge success for the company.
From my point of view, if I were a fan of this artist I would have surely buy the iPod because I would love to see all the parties and interviews that I have missed as well as listen to all the songs that I have never heard. So basically the fans are looking for what they have missed of this artist work not the hits because most probably they got already the CDs of the hits.
Rotana owns the largest library of the Arabic music and movies in the world as well as have contracted with most of the Arab artists. So we can imagine that the company definitely have lots of products (music and movies) on the Long Tail for whatever reasons. I think it’s very smart of the company to mix the old with new, the popular and non-popular and come up with one unique package (iPod) to the customer that is in top of that highly personalized.
The business model used here by Rotana is scalable considering that they have already contracted with most of the Arab artists, therefore, same model could be applied to other artists beside they can be more creative by including two artists works in one iPod. Also, they can produce an iPod that contains popular scenes of old and new movies as well as funny scenes from popular and non-popular plays along with short parts of their shows and programs or interviews with actors/actresses and they can call it for example “Rotan’s hits” or “The best of Rotana”.
By doing so, they will be able to sell so many of their products that are on the Long Tail and gain an incremental revenue out of it.
I believe that this model is very much sustainable because most of the population in the Arab world are youngsters (between the ages of 15-25). Those young people have a great passion for music and movies and still in the process of exploring their tastes and this is by itself an advantage for Rotana.
What give Rotana an edge over other entertainment companies in the Arab world is their huge library of an existing range of music and movies as well as, their yearly new productions of music, video clips and movies. Add to this their distribution channels and their TV stations.
In my opinion Rotana’s Long Tail products can always be sold through the following:
• Using latest technology as a medium to offer the music for example iPods and mobile sets.
• Offer the music as a ring tones to the Telecom companies and other content re-tailors.
• Conducting concerts all over the world targeting the Arab community if it is outside the Arab world.
• Broadcast the music and the movies through Rotana’s channels.
• Broadcast the music through Rotana radio
• Use Rotana magazine as a promotional instrument for the company’s Long Tail music or movies.
• Broadcast the music and movies in Rotana cafes whether in Beirut, Syria or the upcoming one in Cairo.
The Long Tail term describes those products with low demand or low sales volume which can collectively make up a market share that exceeds the current bestsellers, if only the store or distribution channel is large enough. For example, Netflix has centralized warehouses, therefore their storage cost is low and their distribution costs are always the same whether for popular or non-popular movies. As a result of that, they are able to create a huge stock of wide range of movies than the traditional movie rental stores and their revenue out of the non-popular movies collectively has exceeded their hits.
On the other side, what really helps the customers to have access to this vast amount of varieties even outside their geographic area is the availability of powerful search engines, recommender software and sampling tools.
I believe that the Long Tail phenomenon has a positive impact on the marketing environment. For example, the consumers have benefit widely from following the good recommendations which gives them the chance to explore new items that are more appealing to their taste. The retailers for sure benefit by increasing their sales revenue through pushing back to the market some products that one day have achieved moderate revenue or maybe none. Also the Long Tail has an impact on the culture as it could lead to improvement in society’s sense of culture in different ways through for instant reviving some old songs or movies or even TV series. In addition to that, we should not neglect the impact of the Long Tail on the entertainment industry as a whole because it allowed smaller movies, music and other products to reach out whether to customers or producers. We can say that the phenomenon of the Long Tail has flourished creativity across so many fields and youTube could be a good example here.
I guess in the future there will be a shift on the digital entertainment industry from the mass market to smaller niche markets that are more personalized and are appealing to different groups tastes. The reason why I am saying that is because there are lots of people who do follow the recommendations given to them whether we are talking about books, music, DVDs or other items. They are discovering their taste, trying to explore new things instead of just accepting what is pushed to them over the mass market.
The Long Tail phenomenon has surely affected most of the internet based businesses to an extent where most of them have leveraged the Long Tail as part of their businesses. The following are good examples:
• eBay (auctions)
• Yahoo, Google (Web search)
• Amazon (retail)
• iTunes store (music and broadcast)
• Netflix (video rental)
The question is whether the Long Tail could work on the traditional businesses (off- line) or not? Personally I think it does work maybe with a less degree than the internet based businesses but it can work. For example if we considered FNAC or Virgin Mega stores here in Paris at least, from time to time we notice that they are offering some DVDs or CDs with lower prices. Those items could be an old published items or items that have achieved modest revenue below the re-tailors expectations and sometimes it could have been a hit one day. Another thing I found it very interesting is that at FNAC this year before releasing Matt Damon movie “The Bourne ultimate” which I guess many people were looking forward to watch, they offered a package of the previous series “The Bourne supremacy” and “The Bourne identity” produced at the years 2004, 2002 respectively. Now in any of these situations the re-tailors managed to push back products, from their Long Tail, to the market and I am pretty sure there is incremental revenue gained out of this practice otherwise they wouldn’t have done so. In another words, the re-tailors are pushing back products to the consumers down the tail with lower prices.
Chris Anderson (Author of The Long Tail: why the future of business is selling less of more) said “such “misses” – referring to the non-popular products- cost less to make available than hits, so why not even less for them?”
Another example is the TV stations. I am going to talk about a TV stations in my home country Dubai. As we know most of the TV stations are competing to come up with new programs and movies to attract the largest percentage of viewers, now this is a norm. In Dubai we have a channel called “Sama Dubai” targeting purely UAE nationals and some nearby Gulf States because anyway we have a common culture. I have noticed that this channel is re-broadcasting from time to time some very old popular TV series, plays, songs and even cartoons. Things I have not seen since my childhood especially the cartoons. I know that I am old enough now and I ought to watch some serious stuff whether on CNN or maybe financial news but you can’t imagine how much thrilled I was to see those old cartoons. In fact I wasn’t the only one who loved it; everyone liked the whole programs offered by Sama Dubai regardless of the ages. Now what did this channel do? They have revived some old products –the programs- and reoffered it to the customers –the viewers- and to their surprised the whole thing was a success as they realized that they are many followers to these programs. Of course the TV’s revenue come out of the commercial slots during the shows which could exceeds collectively in this case the revenue generated from other programs not existing on the Long Tail.
Another example of TV station is Rotana. Rotana is a Saudi TV station offering around five specialized channels. I am going to specify here two main channels as on a later stage I am going to talk about the digital music on this company. Rotana has a channel called “Rotana tarab” (which is specialized on broadcasting old Arabic songs) and “Rotana zaman”(which is specialized on broadcasting old Arabic movies). With the high competition towards producing hits songs and video clips as well as the huge financial budgets (of course insignificant if we compare it to the US movies industry!) allocated for new movies, those two channels have survived and made it through. There are lots of followers to these channels as well as their revenue (out of commercial slots and SMS) collectively could exceeds sometimes the revenue generated from some new shows suppose to be considered as a hit.
Last but not least example that I can come up with to demonstrate that the Long Tail phenomenon could exist offline as well is on the Telecom services. Now I know that I have chosen a very sensitive sector that the changes and improvements within it are a must, but let’s say the example that I am going to demonstrate is a very special case and could not be applied always to this sector because with the new technology and invention some products or services could ended up as obsolete and are replaced by more modern practical technology.
Companies like Mobily in Saudi Arabia and Etisalat in UAE are usually bundling services like voice mail and call transfer facilities and re-offer it with their GSM cards and pre-paid cards. Now these services were a hit one day but with the emergence of new services like SMS, MMS, roaming, and missed calls notification services, customers have shifted away from voice mail and call transfer facilities to these new services. So with the bundling strategy used, the telecom companies were able to gain incremental revenues from their Long Tail products like the voice mail and the call transfer.
Case Study
Rotana started off as a record company in 1987, and grew to become the leading producer / distributor of Arabic music and film in the world, with the highest revenue generating mobile content corporation in the entire Middle East, North Africa, the Gulf and Europe. (www.rotana.net)
Rotana has offered recently a limited edition iPods (5000 iPods only) that contains all the songs, video clips, parties, and interviews of one of their artist. The iPods produced are with a serial numbers engraved on the back of the iPod as well as the photo of the artist on the front. What makes this iPod unique is the content. They have included some very old songs as well as songs that have never been heard or watched to the artist’s fans along of course the other known songs. Also the limited edition offer and the serial numbers given have personalized the product and made it special to the customers. In addition to that they offer the buyers a free upload to all the up-coming songs of the same artist. The iPod was a huge success for the company.
From my point of view, if I were a fan of this artist I would have surely buy the iPod because I would love to see all the parties and interviews that I have missed as well as listen to all the songs that I have never heard. So basically the fans are looking for what they have missed of this artist work not the hits because most probably they got already the CDs of the hits.
Rotana owns the largest library of the Arabic music and movies in the world as well as have contracted with most of the Arab artists. So we can imagine that the company definitely have lots of products (music and movies) on the Long Tail for whatever reasons. I think it’s very smart of the company to mix the old with new, the popular and non-popular and come up with one unique package (iPod) to the customer that is in top of that highly personalized.
The business model used here by Rotana is scalable considering that they have already contracted with most of the Arab artists, therefore, same model could be applied to other artists beside they can be more creative by including two artists works in one iPod. Also, they can produce an iPod that contains popular scenes of old and new movies as well as funny scenes from popular and non-popular plays along with short parts of their shows and programs or interviews with actors/actresses and they can call it for example “Rotan’s hits” or “The best of Rotana”.
By doing so, they will be able to sell so many of their products that are on the Long Tail and gain an incremental revenue out of it.
I believe that this model is very much sustainable because most of the population in the Arab world are youngsters (between the ages of 15-25). Those young people have a great passion for music and movies and still in the process of exploring their tastes and this is by itself an advantage for Rotana.
What give Rotana an edge over other entertainment companies in the Arab world is their huge library of an existing range of music and movies as well as, their yearly new productions of music, video clips and movies. Add to this their distribution channels and their TV stations.
In my opinion Rotana’s Long Tail products can always be sold through the following:
• Using latest technology as a medium to offer the music for example iPods and mobile sets.
• Offer the music as a ring tones to the Telecom companies and other content re-tailors.
• Conducting concerts all over the world targeting the Arab community if it is outside the Arab world.
• Broadcast the music and the movies through Rotana’s channels.
• Broadcast the music through Rotana radio
• Use Rotana magazine as a promotional instrument for the company’s Long Tail music or movies.
• Broadcast the music and movies in Rotana cafes whether in Beirut, Syria or the upcoming one in Cairo.
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